In line with President Uhuru Kenyatta’s housing agenda, the National Social Security Fund is considering allowing its members to use their savings as collateral for mortgages.
NSSF chair Julius Karangi said the plan is in high gear when the pension fund received the Business Continuity Management System BCMS 22301:2019 certification from the Kenya Bureau of Standards (KBS).
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”This was in the plan before Covid-19. We are going to work around this to ensure members receive the necessary support to build houses for their families,” Karangi said.
Labour Cabinet Secretary Simon Chelugui took a similar stance, stating that the NSSF intends to comply with the Retirement Benefits (Mortgage Loans) (Amendment) Regulations 2020.
The law passed by the Parliament in September last year allows members of retirement benefits schemes to use 40% of their pension savings to buy houses or 60% as mortgage security.
Pension funds had a year to implement the regulations and educate their members on how to access the funds.
This provision does not apply to scheme members who are already receiving pension earnings, members who are on early retirement, or those who have reached the retirement age.
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The government has only delivered 228 of the 500,000 housing units promised in 2017, necessitating the need to entice buyers and developers. Developers’ corporate tax has been reduced by half.
Furthermore, inputs for affordable housing construction are now exempt from Value Added Tax (VAT), and project approval fees are waived.
Recent home-loan market surveys identified upfront cash requirements as one of the major impediments to market growth.
According to the Central Bank of Kenya’s most recent survey, mortgage penetration in Kenya is currently at 4.3 per cent of GDP, which is higher than the developed world average of 50 per cent.
